Graduate job report discomfits ministers
But rapidly growing numbers are recruited to low-pay, low-skill jobs with few prospects - particularly in the service sector - which were once done by school-leavers, according to a survey by the National Institute of Economic and Social Research.
The NIESR has long been seen by the Department for Education as one of the most reliable indicators of trends and needs, and it is regularly commissioned for Government projects. But ministers can take small comfort from the latest study - the most extensive since the late 1980s.
It shows an ever-deepening dissatisfaction among employers with the quality of graduates, their lack of initiative, basic skills and ability to work in teams. But employers are largely found guilty of failing to exploit what skills graduates have, and of creating too few new jobs.
A key reason identified in the report is the narrowness of the 16 to 18 school and college curriculum, which has raised expectations but failed to give students the skills industry needs. The study also challenges the Government's fundamental belief that driving down costs has been accompanied by increased quality of the workforce.
The institute joins an increasing chorus seeking a shift of cash for student support from universities to the FE sector. But post-16 reforms are seen as more crucial, and the report backs calls for a radical package of reforms from Sir Ron Dearing's 16-19 review.
The overall quality of graduates would be "more greatly improved by the broadening of the sixth-form curriculum in England and Wales to ensure that core subjects such as maths and English cannot be dropped at too young an age", says the report.
"A reduction in the subject specialisation at ages 16 to 18 would not only produce more rounded individuals, but would also probably help increase the proportion of students qualified to enter science and engineering courses, for which maths is a prerequisite."
The study reveals that the best sector for high pay, job satisfaction and training is manufacturing and engineering, where maths is usually needed. Graduates in engineering, technology, foreign languages and business studies are recruited for new-style jobs as team-leaders and high-grade clerical staff.
Geoff Mason, author of the NIESR report, said: "What is going on in manufacturing generally conforms with the idea that an increase in higher education participation should be good for the economy.
"The great majority of new graduates taken on in an industry like steel are appointed to jobs where their skills and knowledge are well utilised, and the overall upgrading of qualification levels looks set to contribute to further growth in productivity and competitiveness."
But manufacturing can only absorb about one in seven graduates. Most will go to the service sector, where the picture is much bleaker. Banks and building societies recruit increasing numbers of graduates as clerks, on the same pay as all inexperienced non-graduate cashiers.
Almost half the graduate recruitments last year were to unmodified jobs for which no degree was needed. Apart from the high-fliers, most graduates were recruited to the service sector on salaries one-third lower than other graduates.
The NIESR survey makes detailed comparisons with the United States and Europe, which show that there are limits to which companies can recruit graduates to compensate for deficiencies in their own skills training. But nor can short courses in skills training for new recruits compensate for deficiencies in the post-16 curriculum.
The New Graduate Supply-Shock: Recruitment and Utilisation of Graduates in British Industry, by Geoff Mason. Available from NIESR, 2 Dean Trench Street, London SW1P 3HE (Tel 0171 222 7665) Price Pounds 11.50.